Window on Washington - Vol. 1, Issue 38

One Shutdown Averted, Countdown Begins Again: With the government funded through December 22, House and Senate leadership are shifting their focus on how to structure a long-term spending deal that would include an increase of the spending caps under the Budget Control Act. Both House Speaker Ryan and Senate Majority Leader McConnell are proposing spending cap increases larger than those in previous deals and some Members of Congress are floating increases in discretionary spending in the $200 billion range. Republicans and Democrats would then need to decide how to allocate this spending with Republicans wanting a large share to go towards defense. Democrats have stated that they want parity between defense and non-defense spending. Lawmakers also have to figure out how to deal with disaster aid in a final spending package as over $150 billion is estimated to be needed for Texas and Puerto Rico.

Tax Conference Negotiations Continue: With the appointment of Senate conferees on Thursday, House and Senate negotiators worked through the weekend on the final package for tax reform. Last week, House Majority Leader McCarthy said that a vote on a final bill is not expected to occur this week and it is unclear when a vote would be scheduled. Lawmakers continue to say they want to finish by the end of the year. The House will now be in session the week of December 18 despite previously being scheduled to be recess.

Congressional Calendar for 2018 Released: Both the House and Senate calendars have been released and a combined version can be found here.

Window on Washington - Last Week in the Nation's Capital

Congress

Tax Reform

The Unkindest Cut: How to Pay for Tax Overhaul Sweeteners: As the House and Senate prepare for a conference committee on the Republican tax overhaul, the two chambers face the challenge of reconciling stark differences, and where to find billions of dollars they may need to smooth things over. Among the most significant discrepancies are the treatments of pass-through businesses, the estate tax and the corporate alternative minimum tax. House Republicans are also considering a provision to further scale back the proposed trimming of the state and local tax deduction. (Roll Call)

GOP Wrestles with Keeping Prized 20% Corporate Rate: Republicans would face an uphill battle if they decide to increase the corporate tax rate from 20 percent in their tax-reform legislation. Reducing the corporate rate from 35 percent to 20 percent is seen as a crowning achievement and the bill’s centerpiece. GOP lawmakers also think a 20 percent rate is the key to improving business competitiveness, but members are coming under pressure to bump it up a percentage point or two to help pay for other tax cuts. (The Hill)

Several Education Tax Breaks Are at Risk in House Plan: As lawmakers attempt to reconcile the House and Senate tax bills before Christmas, they'll be forced to take a hard look at some higher education tax breaks. The House bill eliminates benefits to taxpayers who are paying off their student debt or currently paying tuition for themselves or their children. It would also start taxing tuition waivers received by many graduate students. (CNN)

'Holy Crap': Experts Find Tax Plan Riddled with Glitches: Republicans’ tax-rewrite plans are riddled with bugs, loopholes and other potential problems that could plague lawmakers long after their legislation is signed into law. Some of the provisions could be easily gamed, tax lawyers say. Their plans to cut taxes on “pass-through” businesses in particular could open broad avenues for tax avoidance. (Politico)

Budget

Congress Passes Two-Week Continuing Resolution: One day before the deadline, the Congress passed a two-week continuing resolution that funds the government through December 22. Despite initial reluctance from conservative House Republicans, GOP leadership was ultimately able to pass it by 235-193. Trump signed the bill into law on Friday. (Politico)

Negotiations Continue on Final Spending Deal: Senate Majority Leader McConnell, Senate Minority Leader Schumer, House Speaker Ryan and House Minority Leader Pelosi met at the White House on Thursday to continue negotiations with President Trump on a final spending package. They also discussed the need to raise the spending caps but did not come to an agreement on how much they need to be increased. (Roll Call)

Banking/Housing

Hensarling Signals Breakthrough in Mortgage Reform: House Financial Services Chairman Hensarling said his comprehensive mortgage reform bill, the Path Act, is unlikely to become law and that he is reaching out to Democrats and others to begin work on bipartisan legislation. Hensarling said it is politically inevitable that any reform package will include a government guarantee of mortgage bonds like those issued by Fannie Mae and Freddie Mac. (Politico)

Health

Bipartisan Group of Senators Urge Action to Stop Cuts to 340B Program: Six Senators - three Republicans and three Democrats - sent a letter to Senate Majority Leader McConnell and Minority Leader Schumer urging them to block a Trump Administration rule set to take effect on Jan. 1 that slashes $1.6 billion from Medicare payments to hospitals enrolled in the 340B drug discount program. Earlier this fall, 51 Senators sent a letter to the Centers for Medicare and Medicaid Services expressing concerns about the cuts. (The Hill)

Fate of Cost-Sharing Subsidies Uncertain: In exchange for Senator Collins’ vote on the Senate tax bill, Senate Majority Leader McConnell agreed to pass the Alexander-Murry cost-sharing subsidies bill, but House Speaker Ryan stated this week that he is not bound to that deal. In response to Speaker Ryan, Senator Collins said that her vote on the final tax bill would hinge on the fate of the cost-sharing subsidies. (Politico)

Congress Approves Reserve Funding for CHIP: As part of the passage of the Continuing Resolution, Congress included a provision that would allow the Centers for Medicare and Medicaid Services to allocate reserve CHIP funds to states most in need of it. This provides some extra breathing room for the states that are expected to run out of funding by the end of year as they wait for Congress to reauthorize CHIP. (Bloomberg)

Energy

Democrats Question CBO’s Projections on ANWR Revenue Alaska Drilling Auction Yields Few Bids: The Interior Department received only seven bids totaling $1.2 million for the oil and gas lease sale in the National Petroleum Reserve in Alaska. Democrats are now questioning the Congressional Budget Office’s (CBO) projections of revenue that can be raised by drilling in Arctic National Wildlife Refuge (ANWR) after the outcome from the National Petroleum Reserve bids. The CBO projected drilling in ANWR would raise $1.1 billion over 10 years. (Washington Examiner)

Nominees

The Senate confirmed Kirstjen Nielsen to be Secretary of Homeland Security, filling the vacancy created when President Trump selected retired Gen. John Kelly to be his chief of staff.

The Senate Finance Committee advanced by voice vote Thursday the nomination of Kevin McAleenan to be Commissioner of Customs and Border Protection.

Kevin McIntyre was sworn in as Federal Energy Regulatory Commission Chairman, taking over from Neil Chatterjee, who remains on the panel. For the first time in more than two years, all five of FERC's seats are filled, with Trump having selected four of the sitting commissioners.

President Trump’s nominee to head the EPA enforcement office, Susan Bodine, was confirmed today by the Senate by voice vote.

Executive Branch

EPA

Pruitt: EPA to Replace Obama Climate Rule: The Environmental Protection Agency will pursue a replacement climate change rule for power plants after repealing the Obama Administration’s regulation on the matter, agency head Scott Pruitt told a House Energy and Commerce Committee panel on Thursday. (The Hill)

DOI

Trump Shrinks Utah National Monuments by Millions of Acres: President Trump signed two presidential proclamations Monday to scale back the Bears Ears and Grand Staircase-Escalante national monuments in Utah, opening federally-owned public lands for private development. The Bears Ears monument is shrinking from 1.5 million acres to 220,000 acres and the Grand Staircase-Escalante is going from 2 million acres to 1 million acres. (Axios)

Interior Secretary Urges Size Cuts, Management Changes to More Monuments: Interior Secretary Ryan Zinke recommended President Trump reduce the size and change the management of more national monuments in the western United States, and lashed out at critics of cuts already announced to protected areas in Utah. (Reuters)

Labor

DOL Proposes Rolling Back Obama-Era 'Tip Pool' Rule: The U.S. Department of Labor proposed rolling back a rule that blocks employers from taking some service workers’ tips to share with non-tipped staff, citing Supreme Court petitions regarding the controversial Obama-era rule and uncertainty about the agency’s authority to issue it. (Law 360)

Solid U.S. Jobs Report Clears Way for Rate Rise: The U.S. extended its multiyear run of uninterrupted jobs growth in November as employers took on more workers than expected, cementing expectations for another rise in interest rates next week. Non-farm payrolls rose 228,000, according to the Labor Department, comfortably above the median forecast of 195,000 from a survey of economists by Bloomberg. Unemployment held at 4.1 percent, equal to the lowest figure since the early 2000s, while average hourly earnings rose 2.5 percent on the year. (Financial Times)

Trade

U.S. Solar Manufacturers Appeal to Trump Team for Stiff Tariffs: Struggling U.S. solar panel makers asked President Trump’s key trade policy advisers to support steep tariffs on foreign-made solar products, ahead of his imminent decision in a closely watched trade case. (Reuters)

HHS

HHS is Looking to Congress to Lead on Opioid Crisis Funding: Acting Health and Human Services Secretary Hargan said that HHS is looking forward to hearing from Congress as to how they intend to provide the funding for the opioid crisis and that the Administration intends to work closely with Congress to help develop those numbers further. (Medscape)

Healthcare Spending Slowed in 2016: According to a report by the Centers for Medicare and Medicaid Services, overall growth in national healthcare spending only grew at a rate of 4.3 percent in 2016 compared to the rate of 5.8 percent in 2015. (Insurance Journal)

Number of Americans with Alzheimer’s or Cognitive Impairment Expect to Double by 2060: The number of Americans with Alzheimer’s disease or mild cognitive impairment, which can be a precursor to the disease, will more than double to 15 million by 2060, according to a NIH-funded study conducted by UCLA. (Alzheimer’s News Today)

CFPB

Lawsuit Sets Stage for Long Legal Battle over U.S. Consumer Watchdog: Attorneys for Leandra English, the deputy director of the Consumer Financial Protection Bureau, filed fresh paperwork challenging President Trump and his pick to lead the consumer watchdog. A judge rejected English’s emergency filing to install her as the agency’s leader, but the new filing sets the stage for her to continue the legal fight in higher courts. (Reuters)

Trump Promises Heavy Penalties for Wells Fargo: President Trump on Friday tweeted that the he’d ensure stiff penalties against Wells Fargo over allegations of financial impropriety the day after a report emerged that federal fines are being reconsidered. (The Hill)

Transportation

Trump Administration Scraps Obama-Era Proposal Requiring Airlines to Disclose Bag Fees: The Trump Administration has scrapped an Obama-era proposal requiring airlines and ticket agencies to disclose baggage fees as soon as passengers start the process of buying a ticket. The Department of Transportation posted a notice on the Federal Register that it is withdrawing the proposed rule, along with another plan to force air carriers to disclose how much revenue they make from charging other ancillary fees. (The Hill)

Energy

U.S. and Saudi Arabia Will Start Negotiations on a Nuclear Cooperation Agreement: After Secretary Perry’s trip to Saudi Arabia, he announced that negotiations will start soon on an agreement for peaceful nuclear cooperation – also called a 123 agreement – between the two countries. Saudi Arabia previously announced it was looking to diversify its energy supply to include nuclear. If U.S. industry is to be included in Saudi Arabia’s plans, this type of agreement is required for the transfer of nuclear materials, technology and equipment. (Reuters)

Trump’s Plan to Bail Out Coal May be Unraveling Under New Regulator: Kevin McIntyre, sworn in Thursday as Chairman of the Federal Energy Regulatory Commission, has asked to delay acting on Secretary Perry’s sweeping proposal to subsidize struggling coal and nuclear plants, days before a Dec. 11 deadline. The move casts uncertainty over the future of a plan that critics say could cost consumers billions. It has drawn united opposition from oil and natural gas producers and clean energy developers, who deride it as a retreat from fair competition in wholesale power markets. (Bloomberg)

NASA

Independent Review to Examine JWST Launch Plans: NASA will provide an updated launch date for the James Webb Space Telescope early next year, even as some warn that the mission might face further delays. At a December 6 hearing of the House Science Committee’s space subcommittee, Thomas Zurbuchen, NASA associate administrator for science, said the revised launch date would come after an independent review of the status of the spacecraft. (Space News)

Astronomy CubeSat Deployed from ISS: A CubeSat recently deployed from the International Space Station is a key example of their potential, experimenting with CubeSats applied to astronomy. For the next few months, a technology demonstration called ASTERIA (Arcsecond Space Telescope Enabling Research in Astrophysics) will test whether a CubeSat can perform precise measurements of change in a star's light. (Space Ref)

Russian Investigation

White House Turns to Above-the-Law Political Defense: President Trump's personal attorney's claim that the President cannot be guilty of obstructing justice raises two stunning possibilities that could cast the Russia investigation and its threat to his White House in a new and even more serious light. (CNN)

White House

Supreme Court Lets Trump Fully Impose Latest Travel Ban: President Donald Trump’s beleaguered travel ban policy chalked up a significant victory at the Supreme Court as the justices allowed full implementation of the latest version of the restrictions and indicated that the justices’ concerns about the president’s actions on the issue might be eroding. (Politico)

U.S. to Recognize Jerusalem as Israel’s Capital, Trump Says, Alarming Middle East Leaders: President Trump plans to recognize Jerusalem as the capital of Israel and move the American embassy there, upending nearly seven decades of American foreign policy and potentially destroying his efforts to broker peace between Israel and Palestinians. (The New York Times)

Trump Moves to Block Romney from the Senate: Donald Trump is going all out to persuade seven-term Utah Sen. Orrin Hatch to seek reelection — a push aimed in no small part at keeping the president’s longtime nemesis, Mitt Romney, out of the Senate. Romney has been preparing to run for Hatch’s seat on the long-held assumption that the 83-year-old would retire. Yet Hatch, the longest-serving Republican senator in history, is now refusing to rule out another campaign — a circumstance Romney’s infuriated inner circle blames squarely on the president. (Politico)

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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